The departure of Rogers Communications CEO Joe Natale raises questions about the direction of the company, which seeks to end a power struggle on the board of directors and focus on l acquisition of rival Shaw Communications, experts said Wednesday.
In a statement released late Tuesday night, the telecommunications giant announced that Mr. Natale was no longer CEO and was being replaced on an interim basis by former CFO Tony Staffieri. The board has begun research to find a permanent CEO to guide its acquisition of Shaw, a deal valued at $ 26 billion.
Mr. Staffieri is among the candidates for the permanent post, Rogers said.
Tyler Chamberlin, assistant professor at the Telfer School of Management at the University of Ottawa, said that while the family feud over President Edward Rogers’ attempt to replace Mr. Natale with Mr. Staffieri appeared to be settled, uncertainty at the top could have repercussions for the company.
Edward’s mother, Loretta Rogers, and sisters Martha Rogers and Melinda Rogers-Hixon had opposed the changes.
“Are these people going to keep bickering like this?” Obviously, this will not be good for the company, nor for the shareholders, nor for the management team that will take over. And we will need leadership from the board, ”observed Chamberlin.
Edward’s initial attempt to oust Mr Natale to replace him with his number two led to Staffieri’s departure in September, along with a board vote to kick Edward out of his seat as chairman of the board.
Edward then drafted a shareholders ‘resolution – without proceeding through a shareholders’ meeting – to oust the five directors who had challenged him. The company filed a legal challenge against its reshuffled board, sparking a legal battle over who was really on it.
On November 5, a British Columbia Supreme Court judge ruled that Edward’s maneuver was legitimate.
“These family feuds form an interesting backdrop to this dispute which has more in common with Shakespearean drama,” Judge Shelley Fitzpatrick wrote in her ruling.
“No big scandal, no big corruption”
But the departure of Mr. Natale could also lead to a new strategic vision for Rogers, which has just gone through, according to Mr. Chamberlin, a period of “underperformance” during the tenure of the outgoing boss.
“An underperforming CEO is replaced by another executive. This happens often, ”he said.
“This is not a big scandal, it is not a big corruption. It is simply a matter of differences in strategic visions and who should best lead this very large and very precious company. “
RBC Dominion Securities analyst Drew McReynolds said he expects more changes at the senior management level, but does not believe these changes will affect the regulatory approval process of the company. ‘deal with Shaw.
Three federal agencies are reviewing the potential acquisition. The Canadian Radio-television and Telecommunications Commission (CRTC) is scheduled to hold a public hearing on the matter on November 22.
Companies with a dual class of stock, like Rogers, can generate significant profits, but the recent board dispute also highlights the governance risk associated with this structure.
“There is indeed someone in charge of Rogers, and not just as the owner, but able to dictate the direction of management,” said Ben Klass, a member of a research team studying the concentration of ownership in the telecommunications and media sectors in Canada.
“Now Rogers is on the verge of taking control of Shaw, giving him control of a media empire from coast to coast. “
Companies with dual class shares issue different sets of ordinary shares which have different characteristics, particularly in terms of control and voting rights. This often gives a group of shareholders an inordinate share of these rights – usually founders, family members, or company executives.
The structure is used by companies as diverse as Google’s parent company, Alphabet, and Ford Motor Company. In Canada, this list includes Shopify, Canada Goose Holdings, Bombardier, Alimentation Couche-Tard and Canadian Tire.
“The whole feud seems to have been over control. And when one of the people involved in the feud controls 97% of the business, I think the outcome is pretty predictable, ”Klass noted.